NAMA considers US model of selling whole portfolios
Published 20/09/2011 | 05:00
NAMA has revealed for the first time it may package large numbers of assets together into individual portfolios for sale, a technique used in the US savings and loan crisis in the 1990s.
Up to now NAMA has sold individual properties and rejected the idea of selling whole portfolios. But in an interview in the UK, John Mulcahy, one of its most senior executives, has said it will study the idea.
The US authorities in the early 90s sought to prevent buyers from cherrypicking assets by packaging up a range of assets of varying quality and offering them for sale to buyers. This was after turning its back on the sale of individual assets.
Any portfolio approach could divide up assets based on type of asset (development land or investment) or the region where it is based, property sources said yesterday.
Speaking on the fringes of a UK property conference, Mr Mulcahy told 'UKProperty Week' magazine the agency would look at selling properties grouped as portfolios, particular if that is what investors were demanding.
However, he warned that putting good and bad assets together wasn't always the best approach. Mr Mulcahy was a former executive with Jones Lang LaSalle and is centrally involved in many of the agency's key decisions in relation to individual assets.
The savings and loan crisis in the US involved hundreds of thrifts (or building societies) getting into trouble. Eventually the Resolution Trust Corporation was set up to sell their mainly real estate assets.
This asset management company was far larger than NAMA, but used a number of mechanisms to speed up asset sell offs. For example, development land was disposed of by using partnerships over 30-years, which allowed the asset management company and private buyers to share in any long-term upside.
However, it had one major advantage over NAMA in that it was able to tap the US capital markets. Another technique the US agency used was equity parnterships, where the agency handed over management and control of assets, and when they were sold or developed the agency was allowed to share in the profits with the equity partner.
Meanwhile NAMA declined to comment on suggestions it has completed it first 'staple' finance deal where it lends to buyers of assets. The agency refused to comment on suggestions in property circles No 1 Warrington Place in Dublin was funded in this manner.